Plunging Sales of Explorers Dent Ford’s Quarterly Sales Results
Ford Sales Miss Estimates as Explorer SUV Drops 15%
(Bloomberg) -- Ford Motor Co.’s fourth-quarter U.S. sales fell more than expected as a decline in deliveries of its redesigned Explorer dragged down its overall sport-utility vehicle results.
Deliveries of that key Ford vehicle plunged 15%, hurting its position in the hottest segment of the U.S. market. The drop marked the second quarter of double-digit decline in sales of the newly-launched Explorer from a troubled factory in Chicago.
Falling sales of the Explorer along with other SUVs like the Escape were partially offset by a 1.6% gain for Ford’s top-selling F-Series pickup. All told, the automaker posted a 1.3% decline in sales for the last three months of 2019, a steeper decrease than the 1.1% decline forecast by financial analysts.
Shares of the automaker pared an earlier decline of as much as 1.6% to trade down 0.7% to $9.14 as of 3:56 p.m. in New York.
Explorer sales improved significantly in the final three months compared with the previous quarter, Ford said, with December representing its best month for retail sales to individual consumers. Part of the Explorer’s fourth quarter decline was due to a planned reduction in sales to fleet buyers, such as rental companies, it said.
Because the automaker is trimming those lower-margin fleet sales, “it’s going to be a while” before Explorer sales turn up, Mark LaNeve, U.S. sales chief, said in an interview. Retail sales to individual customers also lagged in the fourth quarter, he said.
Ford has previously said the Explorer factory was running at full tilt and deliveries were rebounding, but the latest numbers show the production ramp-up remains challenging.
“After what’s been a launch that wasn’t as smooth early on as we’d have liked, we’re getting our feet under us,” LaNeve said. “You don’t snap your fingers and get all that volume back overnight. You’ve got to work your way into it.”
Ford is building up Explorer inventory “in the heart of the lineup” by focusing on its popular XLT trim series, he said, adding that the quality and quantity of output from its Chicago plants is “dramatically better than six months ago.”
To contact the reporter on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net
To contact the editors responsible for this story: Chester Dawson at cdawson54@bloomberg.net, David Welch
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